• 15
  • September
    2011

In our previous post, we began looking at a recent study conducted by the Institute for Financial Literacy which pointed to an increase in bankruptcy filings among college graduates and higher income earners between 2006 and 2010.

According to Leslie Linfield, executive director of the Institute, the poor state of the economy has been a large factor affecting the number of bankruptcy filings among all consumers, including college educated and high income earners.

In terms of racial demographics, the study found that the number of Asian-Americans filing for bankruptcy went from 2.1 percent back in 2006 to 4.5 percent in 2010. Hispanic filings increased from 6.5 percent in 2006 to 8.7 percent in 2010. The rate of Whites and Native American filings remained roughly the same over that period. The only ethnic group that saw a decrease in filings was African-Americans; between 2006 and 2010, bankruptcy filings fell from 15.4 percent to 11.3 percent.

The study's findings on college grads were particularly interesting. Individuals with college degrees made up 11.2 percent of filers in 2006, but that number increase to 13.2 percent by 2010. That trend is not confined to those holding college degrees either. Those who earned associate and graduate degrees saw similar increases. On the other hand, the number of high school diploma holders and college dropouts filing for bankruptcy declined in that same period.

According to recent data from the Department of Education, students are under increasing financial stress because of the economy. For 2009-2010 fiscal year, student loan defaults apparently increased from 7 percent to 8.8 percent. Students attending for-profit colleges and universities were have been hit the hardest though. The rate of students from those schools who default within the first two years of beginning repayment rose from 11.6 percent to 15 percent.

Source: CNN Money, "Bankruptcy among college grads grows," Aaron Smith, Sep 13, 2011.

All Headline News, "Study: growing number of college grads filing for bankruptcy protection," Vittorio Hernandez, Sept 13, 2011.